- •NYDIG warned mNAV distorts value by excluding debt and additional business assets.
- •The Strive‑Semler merger served as an example of how mNAV can distort actual value.
- •If mNAV is dropped, companies with healthy balance sheets and earnings might benefit.
The crypto industry should stop using the widely adopted market‑to‑net asset value (mNAV) metric, according to NYDIG’s global head of research, Greg Cipolaro. He warned that mNAV is inaccurate and misleading to investors because it overlooks operating businesses, liabilities such as convertible debt, and non‑crypto assets.
Cipolaro stated in a note on Friday that “the industry definition of ‘mNAV’ needs to be deleted and forgotten.” He added that the original definition—“market cap to bitcoin/digital asset value, is a useful metric for nothing.” The warning arrives as publicly traded Bitcoin treasury firms now hold more than one million BTC, with many trading below their stated mNAV levels.
Why NYDIG Says mNAV Misleads Investors
Traders and investors use mNAV to compare the value of corporate crypto holdings with market capitalization. Companies holding more crypto than their market value are seen as trading at a discount, while those with more value than their holdings trade at a premium. Cipolaro argued this framework is fundamentally flawed.
He explained that mNAV does not account for companies conducting business beyond acquiring and holding crypto. Firms such as Strategy Inc., which generate revenue from software sales, are poorly represented under this standard. NYDIG noted that major Bitcoin treasury firms own additional assets and operate businesses that contribute meaningful value.
Another major issue is the use of “assumed shares outstanding.” According to NYDIG, this often includes convertible debt that has not been converted to equity. Cipolaro warned that assuming debt will convert into shares distorts balance sheets and misrepresents obligations. “Accounting for convertible debt automatically as equity is not correct from an accounting or economic perspective,” he wrote.
Cipolaro stressed that convertible debt holders could demand repayment in cash, not equity. He described this as a heavier liability for digital asset treasuries, noting that convertible instruments blend debt with call options, incentivizing firms to increase volatility, exposing investors to greater risks.
Acquisition Brings mNAV Debate to the Forefront
The first-ever merger between two Bitcoin treasury firms has amplified questions about the reliability of mNAV. Strive Asset Management (ASST) acquired Semler Scientific (SMLR) in an all‑stock deal. The combined company now controls more than 10,900 BTC.
The transaction increased net asset value per share, which digital asset treasury investors view as a measure of “yield.” Yet Cipolaro warned that the optics of such deals, when judged under mNAV, can be misleading. “At best, it’s misleading; at worst, it’s disingenuous,” he said.
NYDIG argued the acquisition highlighted how mNAV inflates perceived value without reflecting true balance sheet health. When convertible debt and outside assets are factored in, the picture becomes far more complex. Cipolaro suggested the merger illustrated why the metric must be abandoned altogether.
Related: Digital Asset Treasuries Face Pressure, ETH Stands Strong
What Happens If Firms Abandon mNAV?
If Bitcoin treasury firms adopt this approach to broader valuation, it could cause a shift. Analysts foresee companies that were once hailed for good mNAV multiples being examined more closely, with operating earnings, debt, and dilution risks now a reality.
Weak companies may be targets for consolidation, delisting, or capital reallocation. Hence, smaller digital asset treasuries may not be able to sustain their prices without an mNAV‑dependent valuation system. Meanwhile, companies with diversified businesses, well‑capitalized, and generating steady operating margins would be well‑positioned in a fundamentally driven environment.
The institutional investor landscape has changed with the increasing interest in more disclosure rights within cryptocurrencies. NYDIG’s intervention would have bolstered this, as the entire sector looks into valuation standards that stretch beyond holdings in Bitcoin. Now comes the urgent question: can some Bitcoin treasury entities evolve from mNAV to more sustainable valuation models, or will their collapse set forth a wave of consolidation and re‑valuation?